Friday, November 28, 2008

A Guide to Surviving the Recession For Twenty-Somethings

Like many, I'm reading headlines that aren't too optimistic about the future of the economy. I just read an article that put the potential unemployment rate around 10%, up from roughly 6.5% now.

Unless you are self-employed, you don't have a lot to say concerning your employment status. However, there are a few things you can do to gauge your likelihood of being let go in a layoff. Ask yourself these questions:

1. Are there multiple people with the same job title as you? For example, if you're part of a 15 person engineering department, it's possible that the engineering manager could be expected to give 3 names by the end of the day. If there are 5 mechanical design engineers, 3 drafters and 4 electrical engineers and 2 programmers, the 3 names given will include at least 1 mechanical engineer and 1 electrical. The programmer is the least likely to go.

2. Could your company still function without you?
This is one of the scariest realizations, that your job isn't a lynch pin the the corporate machine. If you realize that you're not critical, it's possible you may be among the first to go. Be honest with yourself and try to gain more responsibility so you leaving will cause maximum corporate pain.

3. Do you get along well with your boss? Here's a dirty little secret. Sometimes major layoffs are used by managers to get rid of merely average employees that they can't exactly fire for any really good reason. Sometimes a department might not be asked to lay anyone off, but a crafty manager might say, "Could I please give you one name?" or even negotiate a deal with another manager, "Hey, I can get rid of Average Adam in my department so you'll only need to let go of 2 people instead of 3 in yours. I'll be calling back my favor later." Don't assume this sort of thing doesn't happen.

4. Does your boss think you are critical to his or her team? Regardless of your opinion on your contributions, if your boss thinks that you're a critical element to the team, you're less likely to be let go. This is why it is critical to always be on good terms with your boss, or at the least not be on the bottom of their list. All managers have favorites (though the professional ones will not exhibit favoritism). If you're a favorite, you're more likely to hold your job.

While the point of the above questions isn't to strike fear into your soul, it should be a wake up call for everyone in Generation Y: We're not invincible. While its possible our baby boomer parents had some sleepless nights after their 401k was rocked by the dot com boom, our lifetime hasn't be scared by any sort of major recession. What we're looking at for the next couple of years is a big deal.

So what do you do? How do you prepare?

1. Make sure you have an emergency fund of liquid assets on which you can live for 6 months. I already hear the cries of twenty somethings saying that there is no way that they can save that sort of money. To which I'll say: baloney. There's no way you can't afford to have an emergency fund. 6 months of expenses should include costs like rent or mortgage, utilities, food, car insurance, health insurance and life insurance. Yes, this is a lot of money - start saving now. Having a 6 month emergency fund is more important than your 401k, paying down high interest loans or just about anything else. I'll be writing an entry on in the future about how to save more money. (But there are only ways: cut expenses or increase income.)

2. Role Play a Worst Case Scenario With a Complete Re-Employment Plan. Assume that you've been given two weeks notice without severance. Who would you contact about finding new job offers? Write down your list so if you're in shock from this unfortunate news, you've got a plan of action. Update your resume. Make contact with old co-workers and managers to find out what they've been up to. Websites like LinkedIn make this easier, but a personal phone call or email can't be beat.

3. Work smarter (not harder) to move yourself up a notch on your boss's favorites list. Revisit questions 3 and 4 above. Try to make yourself a critical part of your managers team. Find out where your manager's pain is and help him fix it. Have lunch with your manager and develop a personal relationship. Find out how your manager is compensated and help them get a hefty bonus. Be the hardest employee your manager has. Remember: now is not the time to slack off.

This is definitely a painfully practical post, but I hope that the readers can think through some of the thoughts. Comment away!


Jaime said...

I always like these painfully practical and informative posts. How long do you think this economy will be in this state before it rebounds? I trust your highly logical opinions.

Kim said...

It's always good to read some practicality. Even practical people are having a rough time making 'optimal' choices right now... I know I'm there.

Nobody's going to know an honest answer to that until we know where we are at the bottom of unemployment. A lot may ride on what the next admin does, for consumer confidence as much as actual policy. The bailout funds aren't even being spent (in lending) because the banks are waiting for the same thing - all that's certain is that the worst has certainly not yet come. Magic 8 ball says "wait 3-6 months and ask again" :D